A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used seven workers who together produce an average of 60 cards per hour. Workers receive $13 per hour and machine cost was $30 per hour. with the new equipment it was possible to transfer one of the workers to another department and equipment cost increased by $10 per hour while output increase by 6 quarts per hour.

compute labor productivity under each system. Use carts per worker per hour as the measure of labor productivity.

before

after

compute the multifactor productivity under each system used cards per dollar cost (labor plus equipment) as the measure.

comment on the change in productivity according to the two measures.

labot productivity

multifactor productivity